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Trading Trump’s Coronation

There’s been nothing ambiguous about investors’ collective reaction to the election of Donald Trump.

Once it became clear that the brazen billionaire had pulled off the unthinkable, US futs collapsed, only to rebound in the blink of an eye after what was variously described as a conciliatory victory speech.

After that, it was off to the races for US equities. Treasurys sold off hard and the dollar soared. The reflation trade had arrived.

Things have calmed down a bit over the last several sessions as the market seems to be a bit gun-shy ahead of Trump’s inauguration which promises to be a raucous event.

For those wondering how stocks have performed in the past immediately after the passing of the White House keys, look no further than the following chart from Barclays which shows that historically speaking, equities tend to consolidate after inauguration day:

(Chart: Barclays)

Of course we can probably toss out the historical record for this one. Judging by the number and scope of planned protests, this time might truly “be different.”

Latest summary from USA Today:

At least 26 protest groups are seeking or have been granted permits — more than four times the average number for past inaugurations — in a show of force that will likely test a sprawling security operation.

In total, nearly 400,000 demonstrators were anticipated as of Friday, according to National Park Service records, with more than half of those expected to participate in the Women’s March on Washington, a coalition of civil and human rights advocates, scheduled to parade through D.C. the day following Trump’s Jan 20 swearing-in.

Writing about a subject is the best
way to educate yourself about it, and when I flick through past work I remember how much
they taught me, if no one else. Mainly they taught me that I didn’t know very much. But they
also taught me that most other people didn’t know much either. Thus, some key themes
which stand out include the illusory control of policy makers, the presumed knowledge of
those looking to them to actively do good, the ease with which we fool ourselves, and how
best to protect capital in the face of such unavoidable uncertainty. -- Dylan Grice